Aggressive telecalling campaigns by upcoming credit card companies make us feel that owning a credit card is as simple a task as having a Christmas pie. But the reality is hard to face. Those who decide upon a particular credit card without shopping around to save money on interest charges and hidden fees end up becoming debt trapped finally.

Owning a credit card can be quite a risky affair and can land you in troubled waters. Before individuals request a credit card or zero in on the deal with any typical credit card company, they should consider various related factors. These include understanding fully the various features of the card, comparing the cost and features of other credit cards, the rights that accompany the card, and the process to lodge a complaint in case they face any problem.

Using Your Credit Card

The choice of credit card also rests on how you are going to use it. If you are of the kind who always wants to pay his bill in full, you should pick a card with no annual fee and long period of grace. In case you occasionally carry over your balance every month, selecting a credit card with lower annual percentage rate (APR) is advisable. But if you are going for a credit card because you are frequently in need of cash advances, you should look for a card with the least APR and charges.

Credit Card’s APR – Meaning For The common Man

APR or the annual percentage rate, when stated in layman’s language, is the method of charging the interest rate on a credit card, if the holder carries over his balance, draws  a cash help, or switches funds from another card. Typically, the APR states the interest rate on a yearly basis. Surprisingly enough, a single card may have more than one APR.

If you have multiple credit card debts, then credit card debt reduction is the right way to go. You would need a three pronged attack to reduce your credit card debt. First is the disposition of the debt. Second is eliminating the cause which resulted in you ending up in debt. Third is taking preventive steps to ensure that once you have cleared the debt, you do not fall into the debt trap again.

Disposition Of The Debt:

The first and immediate need is to come out of the debt situation that you are in. This can be achieved through various methods. Some of them are as given below:

• Debt settlement: Once you are sure that you cannot pay off the debt of your credit card, you can convince your credit card issuer about the same. They may agree to discuss and arrive at a settlement. The normal range of settlement is about 30 – 60 percent of your debt.
• Debt consolidation: You can move the outstanding on your credit cards to a credit card company that offers you a lower rate of interest. Some credit card companies even give a 0% interest period from 3 to 6 months. This will definitely help you in reducing your debt burden.

Identification And Elimination Of Cause Of Debt:

You can come out of debt by using some or the other method. But it is very important to identify the reasons behind you getting into debt in the first place. Was it just because you did not bother to pay the bills on time and it kept on accumulating? Or you never planned your expenses and hence they always exceeded your income? Or you have so many credit cards that you cannot keep track of them and miss out on bill payment of one or the other? Or you never read the terms and conditions? You may have to dig deep and be truthful to yourself to identify the cause and then you have to make sure that you do not make the same mistake again.

Preventive Steps:

It is not only essential to eliminate the cause that resulted in you falling in to the debt trap, but you also have to take care of all the possible reasons that may lead you to a debt trap in future.

Some of the common reasons due to which people fall in a debt trap are as follows:

• No financial planning
• Not paying bills on time
• Impulsive buying

If you follow the above stated process carefully, you can drastically reduce your credit card debt. It may even lead to a complete elimination of your debt and will also help you to keep away from future financial trouble.